Government to bail itself out

In a spectacular turn around Taoiseach Brian Cowen has sided with public opinion on the over-70s medical card issue.

‘I am now convinced there should be an automatic entitlement to everything,’ he said earlier today.

‘We are a country that needed to borrow €12 billion to enable us to live within our means. And yet we were able, as a Government, to guarantee bank assets to the tune of €485b. It didn’t seem to add up. So I said to Brian [Lenihan], why don’t we bail ourselves out? Initially taken aback, within minutes he was on board. It is a bold idea, one that will cause ripples with our European partners, but it is no bolder, and no more improbable that the banks’ bail-out.’

‘I want to be clear on this: Tuesday’s Budget is now cancelled in its entirety. The 1% income levy on gross incomes up to €100,000 and all the wealth taxes. The 8% increase in tax on the litre of petrol. The €200 charge on all non-principal private residences. And, of course, the means test for the over-70s medical card. The status quo ante Tuesday returns.’

‘Secondly I want to announce that the 2007 Programme for Government targets will nonetheless be reached. We will continue to roll out infrastructure nationwide, deliver a fully modern, patient-centred health service, maintain our troops in Camp Ciara in Chad, and we will even, can I add, continue our efforts to cut carbon emissions and implement a 40% use of renewable energy in all state bodies by 2020.’

‘No Government in our history has attempted such a measure. But these are difficult times, and tough times are bad enough without me asking you to make sacrifices.’

Liquiditas

The Government’s guarantee scheme is to be extended to foreign-owned banking groups with ‘significant’ operations in the State, the Minister for Finance Brian Lenihan said today.

In a statement the Minister said Ulster Bank and First Active; Halifax Bank of Scotland (Ireland), IIB Bank, owned by Belgium's KBC; and Postbank, a joint venture between Belgian-based Fortis and the Irish post office; would be eligible for the scheme.

The Minister for Finance said the scheme was being extended ‘to certain banking subsidiaries in Ireland with a significant and broadbased footprint in the domestic economy.’

Taoiseach Brian Cowen has threatened Irish consumers that if confidence in global financial institutions is not restored by Monday the Government will continue to nationalise institutions. Insurance companies, public houses and ailing restaurants will be the next businesses to avail of the guarantee.

The Taoiseach has warned he will not tolerate any abuse of the Government’s bail-out scheme.

By including the foreign-owned banks the State is increasing its potential liabilities under the scheme by approximately 10 per cent to €440 billion. As the Budget deficit amounts to €9 million, the scheme has raised concerns regarding the ability of the State to shoulder the guarantee.

‘We don’t have the money ourselves,’ said the Minister, ‘but our credit’s good.’